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George Soros Reduces Exar Stake

October 11, 2012 | About:
Holly LaFon

Holly LaFon

255 followers
George Soros on Oct. 5 reduced a position in Exar Corp. (EXAR) that he built up through numerous transactions from the second quarter of 2009 through the first half of 2011. Soros reduced his Exar position of 6,666,666 shares by 4.5%, or 300,000 shares, at an average price of $8.40, according to GuruFocus Real Time Picks. He owns a remaining 6,366,666 shares after the sale.

Soros made an approximate 26.5% profit on the average price he paid. Exar stock has gained more than 30% over the last year.

Exar, a semiconductor company, designs, develops and markets analog and mixed-signal integrated circuits for use in communications, video and imaging products. It is a world leader in power management technologies for a variety of end markets, and market leader in connectivity with the industry’s broadest portfolio of the computer hardware universal asynchronous receiver/transmitter (UART) and serial protocol transceivers.

Exar has a market cap of $384 million; its shares were traded around $7.94, with a P/S ratio of 2.9.

When Soros first bought the stock, the company was suffering from a market downturn and had a net loss of $196 million in 2008, after reporting profits for the four prior years. Its net losses have lessened each consecutive year since then, but it has not returned to a profit.

When Soros initiated the position in the second quarter, the company had been reducing operating expenses for eight consecutive quarters and acquired Hifn, a semiconductor manufacturer, to broaden its product offerings in expanding datacom and storage markets.

Exar has not posted a positive quarter in the last year, though it lost the least in its fiscal 2013 first quarter ended July 1, 2012. It reported for that quarter a net loss of $0.6 million, compared to a net loss of $21.6 million the previous quarter and $1.4 million the same quarter the previous year. Revenue increased to $29.3 million, compared to $27.8 million the previous quarter, primarily due to growth in its Datacom and Storage and Communications product lines. It was down from $37 million the same quarter the previous year.

At the end of the quarter, Exar had $10.2 million in cash on its balance sheet, increased from $8.7 million the previous year, and about $9.7 million in long-term liabilities and debt.

Exar’s bookings also increased 22% from the previous quarter, but weak macroeconomic conditions and its dependence on distribution sell-through caused it to express caution about the September quarter.

Soros primarily analyzes global trends to make investments. Global semiconductor sales are currently down 3.2% for August on a three-month rolling average over last year, according to Semiconductor Industry Association. Year to date, sales have declined 4.6% over the same time last year, with declines in all regions. On a sequential monthly basis, sales in the Americas increased (1%) for the first time since April 2012, and Japan was the only other region to increase (1%) month-over-month.

“Global semiconductor sales have held steady in recent months despite strong macroeconomic headwinds, but these challenges have hampered growth,” said Brian Toohey, president and CEO, Semiconductor Industry Association.

In July, the industry projected modest growth for the remainder of 2012.

Exar is the 18th largest holding in Soros’ portfolio of 151 stocks, and comprises 0.78% of his portfolio. His largest holdings are Walmart Stores Inc. (WMT), Adecoagro SA (AGRO) and General Electric Company (GE).


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